The rebound in stock prices is helping mutual funds gain new assets. Strategic Insight reported Monday morning that net flows to US mutual funds were positive in May, marking the second consecutive month of the rebound.

Total net inflows into stock and bond funds during May reached $55 billion, according to the New York City-based research and consulting firm. The firm added that net inflows for the first six months of the year are on pace to reach $150 billion. Strategic Insights estimates include open- and closed-end mutual funds, ETFs, and mutual funds underlying variable annuities covered through the SimFund database.

The flows included a net $25 billion into stock funds and a net $30 billion into bond funds. Meanwhile, money funds saw $18 billion in net outflows. Those flows followed a 5.6 percent increase in the S&P 500 during the month.

The rebound in equity prices combined with the tepid returns of bond funds may create a "slow rotation of inflows to stock funds," according to Strategic Insight's analysts.

"Inflows during April, May, and June have mirrored a recovery of investment confidence in the $11 trillion U.S. mutual fund industry. Fund shareholders, most of whom are buy-and-hold investors, reacted to signs of economic and financial market encouragement by cautiously getting back into the markets," commented Avi Nachmany, SI’s Director of Research.

The month’s inflows included $11 billion into equity ETFs and $3 billion into fixed-income ETFs. US ETF assets totaled $589 billion at the end of May, up significantly from year-end 2008. 

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